Swiss economic recovery to pick up speed in near future

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ZURICH (Reuters) - Switzerland’s economy will gain momentum in the coming months, buoyed in part by an improvement in business sentiment in surrounding euro zone countries, the leading Swiss indicator suggested on Friday.

Supervisor Giuseppe Agosta (R) explains a system to apprentices Diego Garcia (L) and Liridon Ramadoni on a packaging line in the Nescafe production facility in Orbe June 27, 2013. REUTERS/Denis Balibouse

The KOF barometer, a gauge of the economy’s performance in about six months’ time, rose to 1.36 points in August, its highest level since November 2012, from a revised 1.25 points in July, beating expectations for 1.33 in a Reuters poll.

“The year-on-year growth rate of Swiss Gross Domestic Product (GDP) in the near future can therefore be expected to be positive,” the KOF institute said in a statement, adding the core GDP module of the indicator was pointing sharply upwards.

Switzerland’s economy has fared better than those of its austerity-hit European neighbors although sluggish exports to the Europe Union, its biggest trading partner, remained a concern in July.

However, recent data from the euro currency bloc, including business sentiment and private sector growth in Germany, has been more upbeat.

In June, the Swiss government slightly increased its 2013 growth forecast to 1.4 percent, while the Swiss National bank (SNB) stuck to its forecast of 1-1.5 percent growth.

“The KOF says Swiss industry is doing better, that is no surprise. As Europe improves you see the key impact it has on Switzerland,” J. Safra Sarasin economist Alessandro Bee said.

Swiss exports have been supported by a cap the SNB imposed on the soaring franc currency in 2011. But the central bank has warned that the franc remained overvalued and continued to pose risks to the economy.

SNB board member Fritz Zurbruegg said this month the cap on the safe-haven currency would be kept in place for as long as needed.